When it comes to investing, you have many choices. Where should you open an account? Here are my two favorite investment companies.
Investing is an important part of saving for financial independence and retirement. In this post I'll show you the two investing options I recommend, and why you'll love them.
First Some Definitions
To make sure we're on the same page, let's define a few things quickly.
When I say investment companies, I'm talking about a place where you can open accounts, deposit money, and buy investments.
When I say accounts, I'm talking about personal accounts like an IRA, Roth IRA, individual or joint brokerage accounts, and SEP IRA (self employed retirement plan).
When I say investments, I'm talking about things like individual stocks, exchange traded funds, mutual funds and other publicly traded investing products.
Ok, now onto my two recommendations.
#1 - For new investors or tax-deferred investing accounts
I'll make this easy for you.
If you're a new investor or you only have tax-deferred investing accounts (IRA, Roth, SEP, etc.) the choice is simple: Betterment Investing
Betterment is an automated investing service that makes it easy to save, buy a diversified portfolio, then sit back and relax. Have you heard the term "robo-adviser"? Betterment is one of the top robo-advisers.
Betterment's technology takes care of all the buying, selling and rebalancing for you. All for the low cost of 0.25% of your account balance. That means more investment returns for you to compound.
The investment products that Betterment uses are called exchange traded funds. They are similar to mutual funds, but with better tax treatment and trading ability.
Betterment provides extra features like performance charts, basic retirement planning, and tax-loss harvesting. Tax-loss harvesting is a way to reduce your taxes in individual or joint brokerage accounts.
For new investors, Betterment has no minimum to start. Plus it's easy to set up an automated monthly deposit. That way you pay yourself first and don't have to fuss with writing checks or remembering to send investment money.
If you're a new investor or only have tax-deferred accounts, Betterment is a great option.
#2 - For investors with existing larger accounts or capital gains tax issues
If you have existing investments you'd rather not sell, or you have accounts that would cause tax issues by selling, I have another option.
It's an investment company I've used for over 10 years: Folio Institutional
Like Betterment, Folio is an investing service that makes it easy to build a diversified portfolio. But unlike Betterment, you can transfer and hold existing investments like individual stocks, bonds and mutual funds.
If you have existing investments in a taxable account that have grown a lot, you may want to avoid triggering taxes on those gains. Or at least to spread them out over time.
Folio gives you a low cost place to have more control over investment taxes. They also charge only 0.25% of your account balance when you trade in their twice-daily "trading windows". Even if you want to place special trades like limit orders, Folio only charges $3.95 per trade (on top of the 0.25%). That's cheap.
Folio provides performance charts and the ability to invest in pre-built "folios". These are portfolios of stocks or ETFs that have a theme or strategy. Like "Dogs of the Dow", "High Income" or "Small Cap Value". You can buy the complete portfolio with a single click, and no commissions. Just the same 0.25%.
One caveat is that Folio charges a minimum $25 per month or 0.25%, whichever is greater. So you'll want to have at least $120,000 at Folio for max efficiency.
If you want to keep (some of) your investments or have capital gains tax issue, Folio is a good place to transfer your portfolio.
Summary and next steps
Make your investing low cost with one of these investment companies:
- Betterment Investing - One of the top "robo-advisers" where they buy, sell and rebalance a diversified portfolio of ETFs. For only 0.25%, you can automate your savings and investing. Best for new investors or those with only tax-deferred accounts.
- Folio Institutional - A good option for investors who want to keep some of their current investments or who have capital gains tax issues. Folio gives you control over triggering taxes as well as nice features like performance charts.
Check out both of these investment companies. I recommend both for clients and non-clients alike. Choose the best option for your situation. If you have questions or comments, leave them below. I'm happy to help in any way I can.
Had you heard of Betterment or Folio Institutional? Let me know in the comments.
Thanks for reading!